In my many years in the real estate industry, when I approach people to invest in property,
Many people will say that they will invest in property if they have a million dollars or when they get rich.
How to get rich? What is the amount that is considered rich? I supposed the amount varies from person to person.
Investing is one of the ways to make money, and this is how you can grow your wealth.
What is investing?
1. Investing helps you grow your money so you can reach your financial goals
2. Investing is expected to provide better returns than bank deposits, but it also comes with risks
Why invest?
Do you think that a monthly fixed salary and savings are able to grow your wealth fast? Don't forget to factor in inflation, in reality, if you keep this amount of money in your savings account (or fixed Deposit which gives you higher interest), your savings and interest earned will depreciate yearly.
Why there are so many people putting their money into share markets, starting a business, etc…? Because they want to make money fast enough to overcome this.
Investing allows you to grow your wealth. It’s a way to grow your saving and for you to achieve your financial goal. Whatever the reasons, whether it's for your ego, your retirement, your holidays, your family, or your children’s educations fund, it’s always good to start earlier.
before you start any investments, you will need to make sure that you are equipped with the necessary information and knowledge before you begin. In general, investing will generate better returns than putting your money into a savings account of a bank. But be aware that, all investments will come with risks.
There is a possibility that you will lose some or sometimes even all the money you invested.
Likewise, real estate investment is one of the instruments that can help you to grow your wealth, and most probably it’s the lowest risk investment instrument because real estate is real and will not disappear!
Why invest in Real Estate?
Over the last two centuries, about 90 per cent of the world’s millionaires have been created by investing in real estate.
For the average investor, real estate offers the greatest way to develop significant wealth. Just like other forms of investment, it is best to get started early with real estate so you can put time on your side.
Real Estate investment is also one of the best instruments to hedge against inflation too. A good way to begin is to buy your first primary residence - A place you call home.
Why invest in Singapore Properties?
Locations of Singapore
Singapore is located in a strategic geographical location in the world. It connects the east and the west as an interim rest point from the 18th Century as a trading port. Its world-class International airports and well-developed seaport facilities, allow it to become one of the top logistic hubs in the world.
Singapore Stable Economy
Since its independence on 9th August 1965, Singapore, from a third-world developing country to today, a first-world developed country within 30 years, we must give credit to the stable political environment that had painstakingly maintained by the Singapore government who has put in the efforts to understand the needs of the people, and craft up well-developing plans ahead.
Future Planning
Singapore government has lines ahead of four major plans for Singapore to move forward.
1. A world-class transit / logistic hub.
2. A world-class medical research centre
3. A regional financial centre
4. Educational hubs
To support all these developments, they not only prepare Singapore Citizens with the knowledge of each field, learning the latest technology and know-how. They also invite professionals of all these trades to join us.
They have announced and hope to achieve a 6.9 million of the population in the year 2030, currently, we have a 5.7 million population the moment
We need housing to house these people. so even if you are buying at a high today, wouldn't the price be 'cheap' when the population increase?
A small country with limited land
Singapore is a small country with a land size of 792 Square Kilometres. To make sure the property prices are stable and appreciated gradually the government controls and releases land parcels according to the needs of the housing development.
Developers only have 2 sources of acquired land parcels, either from the Government Land Sales (GLS)
or by collective sales of old developments which have redeveloped potential.
The cost of every new development will always be higher than the previous, this allows the prices to appreciate gradually.
Transparent Property Transaction System.
Singapore has a well-developed, transparent, property transaction system.
Every buyer and seller can see the latest transactions in our portal. Nothing hanky-panky.
I remember a Hong Kong seller who was very puzzled when he had to pay IRAS some money, and he eventually said. 'doesn't matter, just pay because IRAS will find his way to refund me if they overcharge me'
This is how a foreigner had so much confidence in our system.
The government has introduced the Total Debt Servicing Ratio (TDSR), to make sure you are financially capable of sustaining and servicing your loan.
The Additional Buyer Stamp Duty (ABSD), aims to moderate demand for residential property, thereby ensuring that residential property remains affordable for Singaporeans and that prices move in tandem with economic fundamentals.
Seller stamp duty, SSD is applied to the sale of residential property within the holding period. The reason for implementing the SSD is to avoid speculating on property trading.
For Singapore Citizens, you should take advantage of all the policies in place. You always have the choice of whether you want to start with Public housing or buy a private residential unit.
You don’t need to have a huge amount of money to buy a property that costs S$1 million. You only need to have hard cash of S$50,000 and S$230,000 in your CPF ordinary account, for the first 25% of the sale price.
What about the balance amount of the S$1 million?
Here is where the leveraging comes in, this balance amount is taken care of by a bank or Financial Institute. You are eligible to take up to 75% of the property price if this is your first mortgage loan (subjected to TDSR).
The key thing here is you are taking advantage of the huge amount of leverage by your home mortgage loan. A home mortgage loan is one of the cheapest loans you will get in your entire life. At this point, the interest rate has increased to 3.3% for certain banks.
You need to know how a home mortgage loan works. There are many ways to keep the cost of the Home Mortgage Loan down (you can always restructure your loans to the way to your advantage).
No Capital Gains Taxes and Inheritance Tax
Capital gains tax is a levy assessed on the positive difference between the sale price of the asset and its original purchase price.
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who's died.
The United States has a capital gain tax of up to 20%.
The federal Estate tax is a 40% tax on assets topping $11.4 million for 2019 ($22.8 million for married couples) and is charged no matter the state in which you live
In Canada, 50% of the value of any capital gains is taxable.
There is no inheritance tax levied on the beneficiaries; the Estate pays any tax that is owed to the government.
Malaysia, up to a maximum of 30% tax on your capital gain.
An Estate of a deceased was liable to a five per cent tax if it was valued above RM2 million, and 10 per cent if it was above RM4 million
In Singapore, there is no Capital gain tax, you will keep the profits you made from selling your property.
NO Inheritance tax in Singapore, you can pass your estate to your successor tax-free.
Now, let's take a look at how you can grow your wealth in property investment.
One of my clients, after learning from me how I can assist him in growing his wealth in property investing, decided to buy a new launch development in High Park Residences for investment.
He bought a 2 bedroom unit during the launch day at the price of S$627,000 and sold the unit when T.O.P (temporary occupation permit) at S$760k making a profit of S$133K in less than 5 years.
But wait, how much does he take out from his pockets?
He took out only 25% of the sale price + stamp duty (3% - 5400) from his pocket.
That comes out to S$156,700 + 13,410 = S$170,110.
He made 78.23% from this property investment giving him annually 15.64% ROI (return on investment)
Now that doesn't stop him! He has just re-invested the amount into a 3-bedroom unit in Jadecape Residences, another new launch development. let's see how much profit he will gain when the development of T.O.P.
I hope the above article can help you to understand how you can build your wealth through property investment and why you should invest in Singapore property.
If you’re at a loss about what you can do, you’re always welcome to get in touch with me, through our property wealth planning system, I believe I will be able to assist you in coming up with a plan to build your wealth through property investment.
Please do share this article with someone keen to look into property investment, they may be able to find something useful to make ends meet.
Peter Tan Choon Guan, The Real Estate Guy.
Associate District Director and Project IC with Huttons Group.
Since 1995, he has been providing professional consulting services to clients in Singapore and beyond. From strategic planning to innovative solutions, his focus is always on building an efficient and results-driven relationship. He will work with you to create a customized plan of action for yourself or your organization.
Peter is an adventurous person, he has been a basketball player since school times, representing schools and organisations in the National Tournament. He is also active in track and field, participated in school events and national events and got a bronze medal for his Long Jump events and a silver medal in his 100M run.
Water sports is another area he is interested in, in obtaining a few medals for his canoeing competition. He conquered Mount Kinabalu in East Malaysia, Mount Tahan and Mount Ophir in East Malaysia.
He is enlisted in National Services as Naval personnel, a Section IC in his department. Appointed to Acting Platoon Sergeant during his Reservist.
During school times, he is a class monitor and a school prefect during his primary school time. Become a youth leader in a later stage. All the exposal created him a leader by nature, able to train and guide people.
Started to run in own business in the year 1995 and ended his business in years 2013. This allows him to be able to communicate at all levels of society. Joining the Real Estate Industry in the year 1995 as a part-timer, after he ended his business in 2013, he focused on Real Estate consultation, not only started to invest in property himself, but he also assisted more than 350 property investors in building their wealth in property investment.
With his hand on investment himself, he will be able to provide you with real-time property insight and strategic planning for your property investment through the Property Wealth Planning System.
WhatsApp Peter if you need any assistance. If you do like this article, please give me some comments and like.
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